You Zigged, I Zagged, Hershey Zugged

How Hershey's Secretive Swiss Trading Unit Delivered 100% Unadjusted (GAAP) Profit Growth This Quarter—But Has a Ton More Work to Do

Hershey’s profit just doubled year-over-year. But it wasn’t because you ate more chocolate—it was because of a secretive Swiss trading unit playing the cocoa market like a hedge fund. Welcome to Zug, where Hershey makes money, not candy.

Jennie Clavel, Unsplash

This morning, Hershey (I own the stock) delivered massive 102% YOY Q4 profit growth, blowing past sell-side analyst estimates. But investors care less about what happened in the past and more about what will happen in the future. To that end, the real focus was on Hershey’s 2025 guidance. Turns out, it’s not looking great.

Hershey anticipates 2025 adjusted EPS to fall to between $6.00 and $6.18, well below sell-side forecasts in the low $7 range, and a ~30% drop from 2024. The reason? Cocoa prices. Have you seen them? Take a look. This is largely why Hershey’s stock is down 25% in the past 6 months and almost 45% since its May 2023 peak.

So then why is the stock up 5% today, despite guiding for 2025 earnings ~20% below Wall Street forecasts?

The Whispers

The answer lies in the difference between sell-side vs. buy-side expectations. The so-called “whisper number” (i.e. what the buy-side is thinking) was probably already in that $6.00 - $6.18 range, if not lower.

For context: